According to a study just completed by the National Institute of Public Finance & Policy (NIPFP) for the finance ministry, India loses 54,560 crore rupees owing to wide ranging tax exemptions! This amount is equivalent to one-seventh of potential tax revenue.



Furthermore, the loss adds up to 1.6 per cent of the GDP (total central tax collections amount to 10.5 per cent of the GDP), a figure that is much higher than the target set by the Twelfth Finance Commission for the year 2009-10. The commission’s target is a 1.2 percentage-point hike in tax collections.



The study estimates that tax losses due to export incentives are around Rs 10,000 crore, a figure that is considerably lower than what the finance ministry had estimated earlier.



Phew!



News Source : Business Standard